Pilots and members of congress blame Gulf airlines for U.S. job losses

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They're calling on the White House to enforce the Open Skies Agreement.

Jess McHugh

June 09, 2017

Representatives from the U.S. airline industry and members of Congress renewed the debate over the Open Skies agreement in May when they again accused Gulf carriers of profiting from government subsidies, and asked President Donald Trump’s administration to reexamine the existing agreements.

“Unfair advantages given to the Gulf nations threaten the level playing field that was created by the Open Skies agreement,” Rep. Brenda Lawrence (D-MI) said at a press conference.

The Open Skies agreements are a series of treaties that give participating countries — including the UAE and Qatar — access to U.S. air markets. The deals aimed to open up international trade and stimulate competition by freeing the airlines from government interference. This freer marketplace is ideally better for passengers, as the competition improves service and decreases prices.

The Open Skies agreements have in turn allowed U.S. markets greater access to international hubs, increasing flights to and from Europe and the Middle East.

They have also generated additional income for local and state entities domestically, promoting economic growth. Minneapolis, for instance, had few international air connections prior to the agreements, and the city of Portland was able to generate $240 million in airport and visitor revenue thanks to Open Skies, according to the Bureau of Public Affairs.

While the economic growth has been beneficial for many U.S. cities, representatives from airline industry organizations, including the Association of Flight Attendants International and the Air Line Pilots Association, now say that the Gulf subsidies are threatening American jobs. They claim that this unfair advantage decreases competition from U.S. carriers and could cause U.S. airlines to cut both personnel and manufacturing jobs.

Delta hired its own investigators to look into the financial reporting of several of the Gulf carriers. These detectives then uncovered $42 billion in subsidies in the period between 2004 and 2015, The Wall Street Journal reported. Rep. Tom Emmer (R-MN) said in last Wednesday’s press conference that this number was now closer to $50 billion.

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Emmer and Lawrence, along with the Partnership for Open and Fair Skies — an organization that represents American, Delta and United — say the job loss caused by these subsidies in the U.S. is significant. The Partnership for Open and Fair Skies estimated that thousands of jobs would be on the line if any of the three airlines had to cut routes over competition from Gulf carriers.

“States like Minnesota that are home to international hubs…get hit extra hard,” Emmer said.

United and Delta have already had to cancel routes from the U.S. to Dubai over competition from the Middle Eastern airlines.

Gulf carriers, including Emirates, Etihad, and Qatar Airways, have previously denied receiving subsidies, accusing the U.S. airlines of lobbying for protectionist policies.

Emirates CEO Tim Clark called the allegations “outrageous,” in 2015, adding, “The legacy carriers' real goal is protection from competition and an end to Open Skies.”

The debate also comes down to a difference in service, according to Mohammed Barakat, managing director of the U.S.-Qatar Business Council.

“We don’t see it as unfair competition. It’s just a matter of competition between airlines,” Barakat told T+L. “We believe that this is a government-to-government discussion.”

Not all domestic airlines agree with the stand of United, Delta, and American, however. Earlier this year JetBlue Airways, Hawaiian Airlines and FedEx took out a small ad campaign to challenge the actions of their fellow domestic airlines and to suggest, as the Gulf carriers did, that the main goal of the coalition’s actions was to limit competition.

“The legacy carriers don’t speak for all — or even most — U.S. airlines,” the group that represents JetBlue, Hawaiian, and Fedex said on its site.

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The U.S. airline unions and government representatives are calling on Trump to hold informal or formal talks with the Gulf carriers with the hopes of winning concessions from the airlines. These talks could even take the form of renegotiating certain elements of the Open Skies Agreements, the Washington Post reported.

Partnership for Open and Fair Skies argues that they want the section of the agreement that prohibits predatory practices to be more strictly enforced. Other industry experts have suggested that the coalition might ask to renegotiate parts of the treaties themselves, including limiting the number of routes that the Gulf carriers can fly in Europe in particular.

“It’s not protectionism to enforce your international agreements. When a country is violating an agreement with the United States, you have to hold them accountable,” said Jill Zuckman, chief spokesperson for the Partnership for Open and Fair Skies.